Retinoids are important in the regulation of differentiation and proliferation of tracheobronchial epithelial cells. In the absence of retinoids cell undergo squamous differentiation as indicated by the expression of several squamous cell markers including the epithelial membrane protein EMP-1 or CL20. Treatment of normal human tracheobronchial epithelial (HTBE) cells with retinoic acid (RA) inhibits squamous differentiation and induces mucous cell differentiation as indicated by the suppression of transglutaminase I and increased expression of the mucin gene MUC2. The latter is accompanied by increased expression of cytochrome P450 gene CYP26 which is involved in RA catabolism. Although RA is required, it is not sufficient to induce RARb, CYP26, and MUC2 mRNA since induction is only observed in confluent but not in logarithmic cultures suggesting that additional factors are critical in their regulation. CYP26 mRNA can be induced by the RAR-selective retinoid TTAB but not by the RXR-selective retinoid SR11217 or the anti-AP1-selective retinoid SR11302. RARa-, b-, and g-selective retinoids are able to induce CYP26, this induction is inhibited by the RARa-selective antagonist Ro41-5253. TTAB is able to induce CYP26 mRNA expression in only a few of the lung carcinoma cell lines tested. The lack of CYP26 induction in many carcinoma cell lines may relate to previously reported defects in the retinoid-signaling pathway. The induction of CYP26 correlated with increased metabolism of RA into 18-hydroxy-, 4-oxo-, and 4-hydroxy-RA. The latter metabolite was shown to be able to induce MUC2 and MUC5AC expression in HTBE cells. Our results demonstrate that in normal HTBE cells CYP26 expression is closely associated with mucous cell differentiation.